Crypto Asia News: India Reviews VDA Framework, Japan Pushes For Extra Reserves, South Korea Implements Stricter AML Rules

[Ben Graham]

Another week, another crypto Asia update. In this week’s update, the focus has shifted towards maintaining regulatory clarity and reinforcing digital asset infrastructure rather than sweeping changes. Governments are fine-tuning what’s already in place.

Here’s the rundown of the biggest headlines from this week in crypto Asia.

India Formally Reviews Its VDA Framework

India currently has more than 100 million crypto users in the country, but lacks a proper framework to govern the sector. For now, the system is heavy on taxes and anti-money laundering (AML). However, it’s very light on investor protection.

The government has realised the shortcomings, and a formal review is underway. Regulators in the country are now looking at ways to build a stronger network that keeps users safe while allowing for innovation.

India Is Reviewing Its Entire Crypto Framework

New VDA rules may reshape the ecosystem

• Risk-based regulation
• Licensing for exchanges
• Stronger investor protection
• Action on wash trading
• Review of 30% tax + 1% TDS

India aims to align with G20 standards. pic.twitter.com/7xRMaVrTvG

— Sapna Singh (@earnwithsapna) November 25, 2025

VDA (Virtual Digital Asset) companies, both domestic and offshore, have had to register with the Indian FIU (Financial Intelligence Unit) since 2023 and follow strict AML and KYC (Know Your Customers) rules.

Still, there is no full law governing VDAs. The gap in regulation has caused talent loss, along with confusion. Meanwhile, calls for reforms have grown strong, especially after India’s G20 presidency in 2023 and a Supreme Court ruling in May 2025 that flagged the need for clearer laws.

The ongoing review is expected to tackle some of the bigger questions haunting investors, including how to balance innovation with investor safety, how to regulate different types of digital assets like stablecoins, how to align with global standards while protecting India’s financial system, and how to give businesses and users more legal certainty.

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Japan Pushes For Reserve Rules For Exchanges

Japan is preparing to tighten its crypto rules again. The country’s Financial Services Agency (FSA) wants exchanges to set aside reserve funds that can be used to pay back customers in case of hacks, system failures, or bankruptcy.

According to a report by Nikkei Asia, published on 25 November, exchanges in Japan have to keep customer funds in cold wallets; however, till now, they did not have to hold extra reserves in case something went wrong. Regulators in the country see that as a big gap, especially now, after several breaches.

UPDATE

Japan just made it mandatory for crypto exchanges to keep emergency cash reserves!

If an exchange fails or gets hacked, customer funds stay safe! pic.twitter.com/upjd6kdGSt

— That Martini Guy ₿ (@MartiniGuyYT) November 25, 2025

The FSA wants to address this gap and, as such, will be introducing a new law regarding this in the parliament in 2026.

If it goes through, exchanges in the country will need to hold extra reserves just like traditional securities firms that usually set aside billions of Yen depending on the volume of trading they handle.

To make things easier for the exchanges, the FSA might allow exchanges to cover part of the requirement through insurance, following in the footsteps of Hong Kong and the UK, where the government has already introduced capital and insurance rules for crypto platforms.

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South Korea’s FSC Targets AML With Stricter Rules

South Korea is getting ready to severely crack down on crypto money laundering operations in the country. Regulators plan to expand the travel rule so that even small transactions under 1 million Won (about $680) will mandatorily carry the sender’s and receiver’s details.

According to a local news report published on 28 November 2025, until now, crypto users in the country could dodge disclosures by breaking larger amounts into smaller transferable chunks that wouldn’t raise much attention, but that loophole, too, is about to close.

South Korea tightens crypto rules: Travel Rule now applies to even small transfers, strengthening AML checks and closing loopholes used for laundering. https://t.co/oY6rryba01 pic.twitter.com/u6h8XBhS3N

— Shunyatax Global (@shunyatax) November 28, 2025

The Financial Services Commission (FSC) said that this move is aimed at stopping crypto from being used for tax evasion, drug trafficking, and shady overseas payments. Additionally, the government wants to block high-risk offshore exchanges from accessing the country’s citizens in general.

Moreover, it wants to tighten financial health checks for local platforms and raise the bar for companies registering as virtual asset service providers.

Also, anyone with a criminal record tied to drugs or tax crimes wouldn’t be allowed to become a major shareholder in crypto firms. The FIU could freeze accounts quickly in serious cases to stop funds from vanishing mid‑investigation.

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Key Takeaways

• India reviews VDA rules to boost investor protection and regulatory clarity
• Japan plans reserve mandates for crypto exchanges to cover hacks and failures
• South Korea tightens AML rules, expands Travel Rule, and blocks high-risk offshore platforms

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